Contractors & suppliers have strong lien rights in South Carolina. If a contractor or supplier isn’t paid on an South Carolina job, they can turn to filing a lien to speed up payment and protect themselves. However, there are specific requirements and rules that must be followed. Here are 5 essential things you need to know about South Carolina’s mechanics lien law.
1) Licensed Contractors Have the Right to Lien
In South Carolina, any project participant that contributes labor or supplies to the erection, alteration or repair towards the improvement of a property has mechanics lien rights. This includes licensed contractors, subcontractors, laborers, design professionals (architects and engineers), surveyors, and equipment lessors.
An especially interesting fact about eligibility in South Carolina is that security guards at the site of labor as well as landscapers are also entitled to mechanics lien rights. The one condition for landscapers is that the amount of work is valued at over $5000.
Note, however, that notwithstanding the broad mechanics lien protection in South Carolina, a potential lien claimant must be licensed if performing work for which a license is required by South Carolina law, and the lien claimant’s license or registration number is required to be provided on the face of the lien claim itself.
2) The Deadline to File a Mechanics Lien in South Carolina is Unique
The deadline to file a mechanics lien in South Carolina is 90 days from the date that a project participant last provided services or materials for a project. However, unlike many other states, South Carolina has a “call-back” policy. A “call-back” generally means that although a project has been claimed “completed” a participant might be asked to perform additional services or last-minute materials. Normally these are not lienable. However, South Carolina allows a lien to be filed 90 days from the date “call-back” work was performed.
3) Preliminary Notice is Not Required but May Protect Participant Rights
It is always advisable to send a preliminary notice on any project in any state, but in South Carolina, it’s not necessarily required. A general contractor can file a Notice of Commencement within 15 days of a projects commencement to either the Clerk of Court or Register of Deeds in the property’s county. It is not mandatory, but filing this notice will better protect the rights of a general contractor. Sub-subcontractors and suppliers to subcontractors will only have rights equal to the amount that the general contractor owes to the subcontractor.
If sub-subcontractors and suppliers to subcontractors do their research, finding out that a Notice of Commencement has been filed, they may in turn file a Notice of Furnishing Labor and Materials that can be served to the general contractor via certified mail with return receipt requested further protecting their own rights.
4) Some Counties Require Proof of Service on Owner Prior to Filing the Lien
Notice the lien was filed must be provided to the property owner. Some counties in South Carolina require that a proof of service of the lien on the owner be provided prior to the recording of the lien. However, in any event, the property owner must be served with a copy of the lien within the same 90-day period in which the lien must be filed. If the property owner cannot be found, the lien may be served on the person in possession of the property — and an affidavit of the sheriff stating that the owner could not be found must be filed. Note that service may not be accomplished by mail, or even by a private process server, South Carolina requires that the lien be served on the property owner (or person in possession, if the property owner cannot be found) by the sheriff.
5) Mechanics Liens Do Not Take Priority Over Prior Encumbrances
Mechanics liens do not generally take priority against prior encumbrances (mortgages etc.) in South Carolina. South Carolina generally applies the “first in time, first in right” rule, and priority is based solely on time. Generally, if there are not enough funds to pay all mechanics liens of the same class, competing liens must share funds on a pro rata basis. Subcontractors and 3rd tier parties take priority over general contractors.